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FIRST DIVISION

G.R. No. 203514, February 13, 2017

COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. ST. LUKE'S MEDICAL CENTER,

INC., Respondent.

DECISION

DEL CASTILLO, J.:

The doctrine of stare decisis dictates that "absent any powerful countervailing considerations, like
cases ought to be decided alike."1

This Petition for Review on Certiorari2 under Rule 45 of the Rules of Court assails the May 9, 2012
Decision3 and the September 17, 2012 Resolution4 of the Court of Tax Appeals (CTA) in CTA EB
Case No. 716.

Factual Antecedents

On December 14, 2007, respondent St. Luke's Medical Center, Inc. (SLIVIC) received from the
Large Taxpayers Service-Documents Processing and Quality Assurance Division of the Bureau of
Internal Revenue (BIR) Audit Results/Assessment Notice Nos. QA-07-0000965 and
QA-07-000097,6 assessing respondent SLMC deficiency income tax under Section 27(B) 7 of the
1997 National Internal Revenue Code (NIRC), as amended, for taxable year 2005 in the amount of
P78,617,434.54 and for taxable year 2006 in the amount of P57,119,867.33.

On January 14, 2008, SLMC filed with petitioner Commissioner of Internal Revenue (CIR) an
administrative protest8 assailing the assessments. SLMC claimed that as a non-stock, non-profit
charitable and social welfare organization under Section 30(E) and (G)9 of the 1997 NIRC, as
amended, it is exempt from paying income tax.

On April 25, 2008, SLMC received petitioner CIR's Final Decision on the Disputed
Assessment10 dated April 9, 2008 increasing the deficiency income for the taxable year 2005 tax to
P82,419,522.21 and for the taxable year 2006 to P60,259,885.94, computed as follows:

For Taxable Year 2005:

ASSESSMENT NO. QA-07-000096

PARTICULARS AMOUNT

Sales/Revenues/Receipts/Fees P3,623,511,616.00

Less: Cost of Sales/Services 2,643,049,769.00

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Gross Income From Operation 980,461,847.00

Add: Non-Operating & Other Income -

Total Gross Income 980,461,847.00

Less: Deductions 481,266,883.00

Net Income Subject to Tax 499,194,964.00

X Tax Rate 10%

Tax Due 49,919,496.40

Less: Tax Credits -

Deficiency Income Tax 49,919,496.40

Add: Increments

25% Surcharge 12,479,874.10

20% Interest Per Annum (4/15/06-4/15/08) 19,995,151.71

Compromise Penalty for Late Payment 25,000.00

Total increments 32,500,025.81

Total Amount Due P82,419,522.21

For Taxable Year 2006:

ASSESSMENT NO. QA-07-000097

PARTICULARS [AMOUNT]

Sales/Revenues/Receipts/Fees P3,815,922,240.00

Less: Cost of Sales/Service 2,760,518,437.00

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Gross Income From Operation 1,055,403,803.00

Add: Non-Operating & Other Income -

Total Gross Income 1,055,403,803.00

Less: Deductions 640,147,719.00

Net Income Subject to Tax 415,256,084.00

X Tax Rate 10%

Tax Due 41,525,608.40

Less: Tax Credits -

Deficiency Income Tax 41,525,608.40

Add: Increments -

25% Surcharge 10,381,402.10

20% Interest Per Annum

8,327,875.44
(4/15/07-4/15/08)

Compromise Penalty for Late

25,000.00
Payment

Total increments 18,734,277.54

Total Amount Due P60,259,885.9411

Aggrieved, SLMC elevated the matter to the CTA via a Petition for Review,12 docketed as CTA
Case No. 7789.

Ruling of the Court of Tax Appeals Division

On August 26, 2010, the CTA Division rendered a Decision 13 finding SLMC not liable for deficiency
income tax under Section 27(B) of the 1997 NIRC, as amended, since it is exempt from paying
income tax under Section 30(E) and (G) of the same Code. Thus:
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WHEREFORE, premises considered, the Petition for Review is hereby GRANTED.

Accordingly, Audit Results/Assessment Notice Nos. QA-07-000096 and
QA-07-000097, assessing petitioner for alleged deficiency income taxes for the
taxable years 2005 and 2006, respectively, are hereby CANCELLED and SET ASIDE.

SO ORDERED.14

CIR moved for reconsideration but the CTA Division denied the same in its December 28, 2010
Resolution.15

This prompted CIR to file a Petition for Review16 before the CTA En Banc.

Ruling of the Court of Tax Appeals En Banc

On May 9, 2012, the CTA En Banc affirmed the cancellation and setting aside of the Audit
Results/Assessment Notices issued against SLMC. It sustained the findings of the CTA Division
that SLMC complies with all the requisites under Section 30(E) and (G) of the 1997 NIRC and thus,
entitled to the tax exemption provided therein.17

On September 17, 2012, the CTA En Banc denied CIR's Motion for Reconsideration.

Issue

Hence, CIR filed the instant Petition under Rule 45 of the Rules of Court contending that the CTA
erred in exempting SLMC from the payment of income tax.

Meanwhile, on September 26, 2012, the Court rendered a Decision in G.R. Nos. 195909 and
195960, entitled Commissioner of Internal Revenue v. St. Luke's Medical Center, Inc.,18 finding
SLMC not entitled to the tax exemption under Section 30(E) and (G) of the NIRC of 1997 as it does
not operate exclusively for charitable or social welfare purposes insofar as its revenues from paying
patients are concerned. Thus, the Court disposed of the case in this manner:

WHEREFORE, the petition of the Commissioner of Internal Revenue in G.R. No.

195909 is PARTLY GRANTED. The Decision of the Court of Tax Appeals En
Banc dated 19 November 2010 and its Resolution dated 1 March 2011 in CTA Case
No. 6746 are MODIFIED. St Luke's Medical Center, Inc. is ORDERED TO PAY the
deficiency income tax in 1998 based on the 10% preferential income tax rate under
Section 27(B) of the National h1ternal Revenue Code. However, it is not liable for
surcharges and interest on such deficiency income tax under Sections 248 and 249 of
the National Internal Revenue Code. All other parts of the Decision and Resolution of
the Court of Tax Appeals are AFFIRMED.

The petition of St. Luke's Medical Center, Inc. in G.R. No. 195960 is DENIED for
violating Section I, Rule 45 of the Rules of Court.
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SO ORDERED.19

Considering the foregoing, SLMC then filed a Manifestation and Motion 20 informing the Court that
on April 30, 2013, it paid the BIR the amount of basic taxes due for taxable years 1998, 2000-2002,
and 2004-2007, as evidenced by the payment confirmation 21 from the BIR, and that it did not pay
any surcharge,

interest, and compromise penalty in accordance with the above-mentioned Decision of the Court. In
view of the payment it made, SLMC moved for the dismissal of the instant case on the ground of
mootness.

CIR opposed the motion claiming that the payment confirmation submitted by SLMC is not a
competent proof of payment as it is a mere photocopy and does not even indicate the quarter/s
and/or year/s said payment covers.22

In reply,23 SLMC submitted a copy of the Certification24 issued by the Large Taxpayers Service of
the BIR dated May 27, 2013, certifying that, "[a]s far as the basic deficiency income tax for taxable
years 2000, 2001, 2002, 2004, 2005, 2006, 2007 are concerned, this Office considers the cases
closed due to the payment made on April 30, 2013." SLMC likewise submitted a letter 25 from the
BIR dated November 26, 2013 with attached Certification of Payment 26 and application for
abatement,27 which it earlier submitted to the Court in a related case, G.R. No. 200688,
entitled Commissioner of Internal Revenue v. St. Luke's Medical Center, Inc.28

Thereafter, the parties submitted their respective memorandum.

CIR's Arguments

CIR argues that under the doctrine of stare decisis SLMC is subject to 10% income tax under
Section 27(B) of the 1997 NIRC.29 It likewise asserts that SLMC is liable to pay compromise
penalty pursuant to Section 248(A)30 of the 1997 NIRC for failing to file its quarterly income tax
returns.31

As to the alleged payment of the basic tax, CIR contends that this does not render the instant case
moot as the payment confirmation submitted by SLMC is not a competent proof of payment of its
tax liabilities.32

SLMC's Arguments

SLMC, on the other hand, begs the indulgence of the Court to revisit its ruling in G.R. Nos. 195909
and 195960 (Commissioner of Internal Revenue v. St. Luke's Medical Center, Inc.)33 positing that
earning a profit by a charitable, benevolent hospital or educational institution does not result in the
withdrawal of its tax exempt privilege.34 SLMC further claims that the income it derives from
operating a hospital is not income from "activities conducted for profit." 35 Also, it maintains that in
accordance with the ruling of the Court in G.R. Nos. 195909 and 195960 (Commissioner of Internal
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Revenue v. St. Luke's Medical Center, Inc.),36 it is not liable for compromise penalties.37

In any case, SLMC insists that the instant case should be dismissed in view of its payment of the
basic taxes due for taxable years 1998, 2000-2002, and 2004-2007 to the BIR on April 30, 2013.38

Our Ruling

SLMC is liable for income tax under Section 27(B) of the 1997 NIRC insofar as its revenues from
paying patients are concerned.

The issue of whether SLMC is liable for income tax under Section 27(B) of the 1997 NIRC insofar
as its revenues from paying patients are concerned has been settled in G.R. Nos. 195909 and
195960 (Commissioner of Internal Revenue v. St. Luke's Medical Center, Inc.),39 where the Court
ruled that:

xxx We hold that Section 27(B) of the NIRC does not remove the income tax
exemption of proprietary non-profit hospitals under Section 30(E) and (G). Section
27(B) on one hand, and Section 30(E) and (G) on the other hand, can be construed
together without the removal of such tax exemption. The effect of the introduction of
Section 27(B) is to subject the taxable income of two specific institutions, namely,
proprietary non-profit educational institutions and proprietary non-profit hospitals,
among the institutions covered by Section 30, to the 10% preferential rate under
Section 27(B) instead of the ordinary 30% corporate rate under the last paragraph of
Section 30 in relation to Section 27(A)(1).

Section 27(B) of the NIRC imposes a 10% preferential tax rate on the income of (1)
proprietary non-profit educational institutions and (2) proprietary non-profit hospitals.
The only qualifications for hospitals are that they must be proprietary and non-profit.
'Proprietary' means private, following the definition of a 'proprietary educational
institution' as 'any private school maintained and administered by private individuals
or groups' with a government permit. 'Non-profit' means no net income or asset
accrues to or benefits any member or specific person, with all the net income or asset
devoted to the institution's purposes and all its activities conducted not for profit.

'Non-profit' does not necessarily mean 'charitable.' In Collector of Internal Revenue v.

Club Filipino, Inc. de Cebu, this Court considered as non-profit a sports club
organized for recreation and entertainment of its stockholders and members. The
club was primarily funded by membership fees and dues. If it had profits, they were
used for overhead expenses and improving its golf course. The club was non-profit
because of its purpose and there was no evidence that it was engaged in a
profit-making enterprise.

The sports club in Club Filipino, Inc. de Cebu may be non-profit, but it was not
charitable. The Court defined 'charity' in Lung Center of the Philippines v. Quezon
City as 'a gift, to be applied consistently with existing laws, for the benefit of an
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indefinite number of persons, either by bringing their minds and hearts under the
influence of education or religion, by assisting them to establish themselves in life or
[by] otherwise lessening the burden of government.' A non-profit club for the benefit of
its members fails this test. An organization may be considered as non-profit if it does
not distribute any part of its income to stockholders or members. However, despite its
being a tax exempt institution, any income such institution earns from activities
conducted for profit is taxable, ad expressly provided in the last paragraph of Section
30.

To be a charitable institution, however, an organization must meet the substantive

test of charity in Lung Center. The issue in Lung Center concerns exemption from real
property tax and not income tax. However, it provides for the test of charity in our
jurisdiction. Charity is essentially a gift to an indefinite number of persons which
lessens the burden of government. In other words, charitable institutions provide for
free goods and services to the public which would otherwise fall on the shoulders of
government. Thus, as a matter of efficiency, the government forgoes taxes which
should have been spent to address public needs, because certain private entities
already assume a part of the burden. This is the rationale for the tax exemption of
charitable institutions. The loss of taxes by the government is compensated by its
relief from doing public works which would have been funded by appropriations from
the Treasury.

Charitable institutions, however, are not ipso facto entitled to a tax exemption. The
requirements for a tax exemption are specified by the law granting it. The power of
Congress to tax implies the power to exempt from tax. Congress can create tax
exemptions, subject to the constitutional provision that '[n]o law granting any tax
exemption shall be passed without the concurrence of a majority of all the Members
of Congress.' The requirements for a tax exemption are strictly construed against tl1e
taxpayer because an exemption restricts the collection of taxes necessary for the
existence of the government.

The Court in Lung Center declared that the Lung Center of the Philippines is a
charitable institution for the purpose of exemption from real property taxes. This ruling
uses the same premise as Hospital de San Juan and Jesus Sacred Heart
College which says that receiving income from paying patients does not destroy the
charitable nature of a hospital.

As a general principle, a charitable institution does not lose its character

as such and its exemption from taxes simply because it derives income
from paying patients, whether outpatient, or confined in the hospital, or
receives subsidies from the government, so long as the money received
is devoted or used altogether to the charitable object which it is
intended to achieve; and no money inures to the private benefit of the
persons managing or operating the institution.

For real property taxes, the incidental generation of income is permissible because
the test of exemption is the use of the property. The Constitution provides that
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'[c]haritable institutions, churches and personages or convents appurtenant thereto,

mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually,
directly, and exclusively used for religious, charitable, or educational purposes shall
be exempt from taxation.' The test of exemption is not strictly a requirement on the
intrinsic nature or character of the institution. The test requires that the institution use
property in a certain way, i.e., for a charitable purpose. Thus, the Court held that the
Lung Center of the Philippines did not lose its charitable character when it used a
portion of its lot for commercial purposes. The effect of failing to meet the use
requirement is simply to remove from the tax exemption that portion of the property
not devoted to charity.

The Constitution exempts charitable institutions only from real property taxes. In the
NIRC, Congress decided to extend the exemption to income taxes. However, the way
Congress crafted Section 30(E) of the NIRC is materially different from Section 28(3),
Article VI of the Constitution. Section 30(E) of the NIRC defines the corporation or
association that is exempt from income tax. On the other hand, Section 28(3), Article
VI of the Constitution does not define a charitable institution, but requires that the
institution 'actually, directly and exclusively' use the property for a charitable purpose.

Section 30(E) of the NIRC provides that a charitable institution must be:

(1) A non-stock corporation or association;

(2) Organized exclusively for charitable purposes;

(3) Operated exclusively for charitable purposes; and

(4) No part of its net income or asset shall belong to or inure to the benefit of any
member, organizer, officer or any specific person.

Thus, both the organization and operations of the charitable institution must be
devoted 'exclusively' for charitable purposes. The organization of the institution refers
to its corporate form, as shown by its articles of incorporation, by-laws and other
constitutive documents. Section 30(E) of the NIRC specifically requires that the
corporation or association be non-stock, which is defined by the Corporation Code as
'one where no part of its income is distributable as dividends to its members, trustees,
or officers' and that any profit 'obtain[ed] as an incident to its operations shall,
whenever necessary or proper, be used tor the furtherance of the purpose or
purposes for which the corporation was organized.' However, under Lung Center, any
profit by a charitable institution must not only be plowed back 'whenever necessary or
proper,' but must be 'devoted or used altogether to the charitable object which it is
intended to achieve.'

The operations of the charitable institution generally refer to its regular activities.
Section 30(E) of the NIRC requires that these operations be exclusive to charity.
There is also a specific requirement that 'no part of [the] net income or asset shall
belong to or inure to the benefit of any member, organizer, officer or any specific
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person.' The use of lands, buildings and improvements of the institution is but a part
of its operations.

There is no dispute that St. Luke's is organized as a non-stock and non profit
charitable institution. However, this does not automatically exempt St Luke's from
paying taxes. This only refers to the organization of St. Luke's. Even if St. Luke's
meets the test of charity, a charitable institution is not ipso facto tax exempt To be
exempt from real property taxes, Section 28(3), Article VI of the Constitution requires
that a charitable institution use the property 'actually, directly and exclusively' for
charitable purposes. To be exempt from income taxes, Section 30(E) of the NIRC
requires that a charitable institution must be 'organized and operated exclusively' for
charitable purposes. Likewise, to be exempt from income taxes, Section 30(G) of the
NIRC requires that the institution be 'operated exclusively' for social welfare.

However, the last paragraph of Section 30 of the NIRC qualifies the words 'organized
and operated exclusively' by providing that:

Notwithstanding the provisions in the preceding paragraphs, the income

of whatever kind and character of the foregoing organizations from any
of their properties, real or personal, or from any of their activities
conducted for profit regardless of the disposition made of such income,
shall be subject to tax imposed under this Code.

In short, the last paragraph of Section 30 provides that if a tax exempt charitable
institution conducts 'any' activity for profit, such activity is not tax exempt even as its
not-for-profit activities remain tax exempt. This paragraph qualifies the requirements
in Section 30(E) that the [n]on-stock corporation or association [must be] organized
and operated exclusively for . . . charitable . . . purposes . . . It likewise qualifies the
requirement in Section 30(G) that the civic organization must be 'operated
exclusively' for the promotion of social welfare.

Thus, even if the charitable institution must be 'organized and operated exclusively'
for charitable purposes, it is nevertheless allowed to engage in 'activities conducted
for profit' without losing its tax exempt status for its not for profit activities. The only
consequence is that the 'income of whatever kind and character' of a charitable
institution 'from any of its activities conducted for profit, regardless of the disposition
made of such income, shall be subject to tax.' Prior to the introduction of Section
27(B), the tax rate on such income from for profit activities was the ordinary corporate
rate under Section 27(A). With the introduction of Section 27(B), the tax rate is now
10%.

In 1998, St. Luke's had total revenues of P1,730,367,965 from services to paying
patients. It cannot be disputed that a hospital which receives approximately P1.73
billion from paying patients is not an institution 'operated exclusively' for charitable
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purposes. Clearly, revenues from paying patients are income received from 'activities
conducted for profit.' Indeed, St. Luke's admits that it derived profits from its paying
patients. St. Luke's declared P1,730,367,965 as 'Revenues from Services to Patients'
in contrast to its 'Free Services' expenditure of P218,187,498. In its Comment in G.R.
No. 195909, St. Luke's showed the following 'calculation' to support its claim that
65.20% of its 'income after expenses was allocated to free or charitable services' in
1998.

xxxx

In Lung Center, this Court declared:

'[e]xclusive' is defined as possessed and enjoyed to the exclusion of

others; debarred from participation or enjoyment; and 'exclusively' is
defined, 'in a manner to exclude; as enjoying a privilege exclusively.' ...
The words 'dominant use' or 'principal use' cannot be substituted for the
words 'used exclusively' without doing violence to the Constitution and
the law. Solely is synonymous with exclusively.

The Court cannot expand the meaning of the words 'operated exclusively' without
violating the NIRC. Services to paying patients are activities conducted for profit.
They cannot be considered any other way. There is a 'purpose to make profit over
and above the cost' of services. The P1.73 billion total revenues :from paying patients
is not even incidental to St. Luke's charity expenditure of P218,187,498 for
non-paying patients.

St Luke's claims that its charity expenditure of P218,187,498 is 65.20% of its

operating income in 1998. However, if a part of the remaining 34.80% of the operating
income is reinvested in property, equipment or facilities used for services to paying
and non-paying patients, then it cannot be said that the income is 'devoted or used
altogether to the charitable object which it is intended to achieve.' The income is
plowed back to the corporation not entirely for charitable purposes, but for profit as
well. In any case, the last paragraph of Section 30 of the NIRC expressly qualifies that
income from activities for profit is taxable 'regardless of the disposition made of such
income.'

Jesus Sacred Heart College declared that there is no official legislative record
explaining the phrase 'any activity conducted for profit.' However, it quoted a
deposition of Senator Mariano Jesus Cuenco, who was a member of the Committee
of Conference for the Senate, which introduced the phrase 'or from any activity
conducted for profit.'

P. Cuando ha hablado de la Universidad de Santo Tomas que tiene un

hospital, no cree Vd. que es una actividad esencial dicho hospital para
el funcionamiento del colegio de medicina de medicina de dicha
universidad?
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xxx xxx xxx

R. Si el hospital se limita a recibir enformos pobres, mi contestacion

seria afirmativa; pero considerando que el hospital tiene cuartos de
pago, y a los mismos generalmente van enformos de buena posicion
social economica, lo que se paga por estos enformos debe estar sujeto
a 'income tax', y es una de las razones que hemos tenido para insertar
las palabras o frase 'or from any activity conducted for profit.'

The question was whether having a hospital is essential to an educational institution

like the College of Medicine of the University of Santo Tomas. Senator Cuenco
answered that if the hospital has paid rooms generally occupied by people of good
economic standing, then it should be subject to income tax. He said that this was one
of the reasons Congress inserted the phrase 'or any activity conducted for profit.'

The question in Jesus Sacred Heart College involves an educational institution.

However, it is applicable to charitable institutions because Senator Cuenco's
response shows an intent to focus on the activities of charitable institutions. Activities
for profit should not escape the reach of taxation. Being a non-stock and non-profit
corporation does not, by this reason alone, completely exempt an institution from tax.
An institution cannot use its corporate form to prevent its profitable activities from
being taxed.

The Court finds that St. Luke's is a corporation that is not 'operated exclusively' for
charitable or social welfare purposes insofar as its revenues from paying patients are
C.Qncemed. This ruling is bacred not only on a strict interpretation of a provision
granting tax exemption, but also on the clear and plain text of Section 30(E) and (G).
Section 30(E) and (G) of the NIRC requires that an institution be 'operated
exclusively' for charitable or social welfare purposes to be completely exempt from
income tax. An institution tmder Section 30(E) or (G) does not lose its tax exemption if
it earns income from its for-profit activities. Such income from for-profit activities,
tmder the last paragraph of Section 30, is merely subject to income tax, previously at
the ordinary corporate rate but now at the preferential tO% rate pursuant to Section
27(B).

A tax exemption is effectively a social subsidy granted by the State because an

exempt institution is spared from sharing in the expenses of government and yet
benefits from them. Tax exemptions for charitable institutions should therefore be
limited to institutions beneficial to the public and those which improve social welfare.
A profit-making entity should not be allowed to exploit this subsidy to the detriment of
the government and other taxpayers.

St. Luke's fails to meet the requirements tmder Section 30(E) and (G) of the NlRC to
be completely tax exempt from all its income. However, it remains a proprietary
non-profit hospital tmder Section 27(B) of the NIRC as long as it does not distribute
any of its profits to its members and such profits are reinvested pursuant to its
 Page 12 of 13

corporate purposes. St. Luke's, as a proprietary non-profit hospital, is entitled to the

preferential tax rate of 10% on its net income from its for-profit activities.

St. Luke's is therefore liable for deficiency income tax in 1998 tmder Section 27(B) of
the NIRC. However, St. Luke's has good reasons to rely on the letter dated 6 June
1990 by the BIR, which opined that St. Luke's is 'a corporation for purely charitable
and social welfare purposes' and thus exempt from income tax. In Michael J. Lhuillier,
Inc. v. Commissioner of Internal Revenue, the Court said that 'good faith and honest
belief that one is not subject to tax on the basis of previous interpretation of
government agencies tasked to implement the tax law, are sufficient justification to
delete the imposition of surcharges and interest.'40

A careful review of the pleadings reveals that there is no countervailing consideration for the Court
to revisit its aforequoted ruling in G.R. Nos. 195909 and 195960 (Commissioner of Internal
Revenue v. St. Luke's Medical Center, Inc.). Thus, under the doctrine of stare decisis, which states
that "[o]nce a case has been decided in one way, any other case involving exactly the same point at
issue xxx should be decided in the same manner," 41 the Court finds that SLMC is subject to 10%
income tax insofar as its revenues from paying patients are concerned.

To be clear, for an institution to be completely exempt from income tax, Section 30(E) and (G) of
the 1997 NIRC requires said institution to operate exclusively for charitable or social welfare
purpose. But in case an exempt institution under Section 30(E) or (G) of the said Code earns
income from its for-profit activities, it will not lose its tax exemption. However, its income from for
profit activities will be subject to income tax at the preferential 10% rate pursuant to Section 27(B)
thereof.

SLMC is not liable for Compromise Penalty.

As to whether SLMC is liable for compromise penalty under Section 248(A) of the 1997 NIRC for its
alleged failure to file its quarterly income tax returns, this has also been resolved in G.R. Nos.
195909 and 195960 (Commissioner of Internal Revenue v. St. Luke's Medical Center,
Inc.),42 where the imposition of surcharges and interest under Sections 248 43 and 24944 of the 1997
NIRC were deleted on the basis of good faith and honest belief on the part SLMC that it is not
subject to tax. Thus, following the ruling of the Court in the said case, SLMC is not liable to pay
compromise penalty under Section 248(A) of the 1997 NIRC.

The Petition is rendered moot by the payment made by SLMC on April 30, 2013.

However, in view of the payment of the basic taxes made by SLMC on April 30, 2013, the instant
Petition has become moot.

While the Court agrees with the CIR that the payment confirmation from the BIR presented by
SLMC is not a competent proof of payment as it does not indicate the specific taxable period the
said payment covers, the Court fmds that the Certification issued by the Large Taxpayers Service
of the BIR dated May 27, 2013, and the letter from the BIR dated November 26, 2013 with attached
 Page 13 of 13

Certification of Payment and application for abatement are sufficient to prove payment especially
since CIR never questioned the authenticity of these documents. In fact, in a related case, G.R. No.
200688, entitled Commissioner of Internal Revenue v. St. Luke's Medical Center, Inc.,45 the Court
dismissed the petition based on a letter issued by CIR confirming SLMC's payment of taxes, which
is the same letter submitted by SLMC in the instant case.

In fine, the Court resolves to dismiss the instant Petition as the same has been rendered moot by
the payment made by SLMC of the basic taxes for the taxable years 2005 and 2006, in the
amounts of P49,919,496.40 and P41,525,608.40, respectively. 46

WHEREFORE, the Petition is hereby DISMISSED.

SO ORDERED.